Layoff - Round 2
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19 Posts
My company is (now) a 58 person firm in Georgia. This last Monday, due to a reduction in our current and forecasted workload, laid of 10 people and has chosen not to replace an administrative staff person who is leaving today. Unless there is a substantial change in the next two months, we're likely going to need to reduce costs further from that which we were able to effect from the recent layoff, plus a salary reduction among our senior staff level people. The first round of people laid off contained some that we likely would not want to rehire, should the workload justify, but this potential next round will include staff that we would like to make a (albeit not contractual) commitment to them that we want them to return. Among the things we have looked at are requiring staff to take personal leave or an unpaid leave of absence with continuation of limited benefits; overall across the board reduction in pay; and reduction of time with equivalent reduction of pay. Are there any other options that you could suggest?
In a related matter, I was speaking with a colleague in another company within the same business, and he referred to a regulation that you could not lay off more than 1/3 of your staff within a 90-day period. His company is substantially larger than mine (+/- 300), so that may be the reason, since I'm not familiar with it.
Any assistance would be greatly appreciated.
Comments
Your colleague is probably referencing the WARN Act which requires 60 days notice or severance in specific instances (certain #/% of employees laid off within a certain period of time). Generally small companies are not big enough to take notice of it. Here's a link to the DOL Fact Sheet on it: http://www.doleta.gov/programs/factsht/warn.htm
We just did a large reduction in pay in November to be able to keep from laying anyone off. We also largely reduced benefits and stopped our 401k match. We might have another round. We haven't discussed forcing unpaid time off at this point.
If you do the reduction in time/pay to exempt employees, you need to make sure that you aren't phrasing it hourly. In other words, say you want to go to a 4 day week and you are reducing their pay to $x (or 20%) for the new position. The exempt employee is still expected to get the job responsibilities done for that salary regardless of the number of hours it takes. You DO NOT want to say that the employee now only has to work 32 hours per week for the 20% reduced pay. This can lead to an issue with whether they should really be hourly non-exempt.....It is just a good can of worms to stay away from honestly.
Your colleague is probably referencing the WARN Act which requires 60 days notice or severance in specific instances (certain #/% of employees laid off within a certain period of time). Generally small companies are not big enough to take notice of it. Here's a link to the DOL Fact Sheet on it: http://www.doleta.gov/programs/factsht/warn.htm
We just did a large reduction in pay in November to be able to keep from laying anyone off. We also largely reduced benefits and stopped our 401k match. We might have another round. We haven't discussed forcing unpaid time off at this point.
If you do the reduction in time/pay to exempt employees, you need to make sure that you aren't phrasing it hourly. In other words, say you want to go to a 4 day week and you are reducing their pay to $x (or 20%) for the new position. The exempt employee is still expected to get the job responsibilities done for that salary regardless of the number of hours it takes. You DO NOT want to say that the employee now only has to work 32 hours per week for the 20% reduced pay. This can lead to an issue with whether they should really be hourly non-exempt.....It is just a good can of worms to stay away from honestly.
[/quote] Thanks - I thought that he might be referring to that - and for the heads up on the FLSA issues.How large was your Company prior to the first round of layoffs and how long was it that large? The issue about layoff restrictions from a federal perspective is the WARN act. At your present size, or anything close to your present size, the WARN act wouldn't apply to you.
I often find that there's hidden headcount that you could reduce. Direct supervisors often don't want to face the challenge of increased workload or the prospect of letting co-workers go. I often go through a production analysis from top to bottom and find that there's extra heads to roll.
Here's an example. Let's say that you are presently staffed to produce 100 widgets per day. It doesn't matter if these are mortage documents for funding or remote controls for television sets. Let's say that the present business demand is 50 widgets per day.
Let's say that the process has 5 steps. In order to do 100 widgets per day, each step requires the following head count
In the example, production is being cut in 2. The stunningly common and wrong way to do that is to do the following:
That takes you down by 6 headcount and 3 people get half a job. That means you layoff 6 people and have 3 disgruntled workers who will probably leave and then you'll be down by 9 and boy won't that be a lot of fun. In this scenario, you should cut 2 additional people but keep everyone fully employed.
Overtime hours solve the third person's absence. It's generally cheaper to spread around a little OT for 1/2 FTE worth of work than to hire headcount on straight time (plus benefits, taxes, and WC).
Of course, this is just a cookie cutter example written with no knowledge of your work flow so this type of solution may not apply well to your situation but it has served me well at a few different companies.
We also largely reduced benefits and stopped our 401k match.
[/quote]
We are considering stopping our 401K match. What kind of messaging did you send out regarding this? We have been struggling with how best to explain it.
Thanks!
We included this in with our annual benefits communication with all the other changes. I did warn participants ahead of time also knowing it was going to happen 1/1. Be careful if you have a safe harbor match in your 401k. Ask your administrator what this change will mean in regard to nondiscrimination testing.
We had quite a drop in participation. We'll have to see if it picks back up.....I am not sure that it will as long as the economy is suffering.
We will watch participation to make sure the admin costs are worth keeping the plan at this point.
Unfortunately I am not on the computer that has the communication on it...I will try to remember to post it for you on Monday.
We also largely reduced benefits and stopped our 401k match.
[/quote]
We are considering stopping our 401K match. What kind of messaging did you send out regarding this? We have been struggling with how best to explain it.
Thanks!
[/quote]
On the compliance side, listen to whatever HRforME has to say on that. On the style side, I'm always as up-front as possible. "Times are tough, we have to cut back. We hope to bring these benefits back in the future. It's hitting my pocket book too. Go back to work before you get selected for the next RIF wave."
How large was your Company prior to the first round of layoffs and how long was it that large? The issue about layoff restrictions from a federal perspective is the WARN act. At your present size, or anything close to your present size, the WARN act wouldn't apply to you.
I often find that there's hidden headcount that you could reduce. Direct supervisors often don't want to face the challenge of increased workload or the prospect of letting co-workers go. I often go through a production analysis from top to bottom and find that there's extra heads to roll.
Here's an example. Let's say that you are presently staffed to produce 100 widgets per day. It doesn't matter if these are mortage documents for funding or remote controls for television sets. Let's say that the present business demand is 50 widgets per day.
Let's say that the process has 5 steps. In order to do 100 widgets per day, each step requires the following head count
In the example, production is being cut in 2. The stunningly common and wrong way to do that is to do the following:
That takes you down by 6 headcount and 3 people get half a job. That means you layoff 6 people and have 3 disgruntled workers who will probably leave and then you'll be down by 9 and boy won't that be a lot of fun. In this scenario, you should cut 2 additional people but keep everyone fully employed.
Overtime hours solve the third person's absence. It's generally cheaper to spread around a little OT for 1/2 FTE worth of work than to hire headcount on straight time (plus benefits, taxes, and WC).
Of course, this is just a cookie cutter example written with no knowledge of your work flow so this type of solution may not apply well to your situation but it has served me well at a few different companies.
[/quote]
This is the largest we've ever been, with the 2000 - 2008 staffing going from 37 to 68. We're a design services company and work in teams, so it's difficult to spread work around sometimes, since team structure demands certain staff at certain levels within the teams. It's somewhat easier for a person at a higher level of experience, than a person with lesser experience to execute the responsibilites of those at higher levels. We've been doing the same sort of production analysis you suggested, and in talking with the senior managers have also ran into the protectionism that you've mentioned.
Perhaps it's time to re-consider the team design.
What type of design? Engineering? Manufacturing? Interior? Other? Let's drill down into this a bit and see if we can come up with something.
One way to break the log jam is to (threaten to) merge teams. If you start talking about the possibility of laying off 1/3 of each of two teams and then joining them into one, larger team and use the word "synergy", they'll be a lot more open to other work flow designs that are less painful.
When you stopped your 401(K) match did you give 30-day's notice? If so, is it absolutely necessary?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Our letter was sent from the President of the company to explain that we were stopping the match for our 401k - for now. It further stressed the importance of contributing to the fund. There was verbiage on the current economic conditions, as well. Basically, we used the "team" approach - we are all in this together. If we stop the match, then we may be able to eliminate some names from our next RIF. The letter was received fairly well.
Our letter was sent from the President of the company to explain that we were stopping the match for our 401k - for now. It further stressed the importance of contributing to the fund. There was verbiage on the current economic conditions, as well. Basically, we used the "team" approach - we are all in this together. If we stop the match, then we may be able to eliminate some names from our next RIF. The letter was received fairly well.
[/quote]
For best results, either the workforce has to suspect there will be a RIF that has not been addressed by management or the workforce has to be properly prepared for the fact of or likelihood of an upcoming RIF. Once you've taken an honest communication angle or, at least, failed to lie, it's easier to talk about things like this. "This savings measure will help us reduce furloughs and keep more headcount on board during these and future anticipated tough economic times."
That's hard to say if your company has done the old "Everything is fine, we don't expect to have to reduce the workforce, you're doing great, keep working hard [etc.]"